Over 5.8 million South Africans own a crypto asset, meaning that nearly 10% of the country’s population owns some form of cryptocurrency.
This was revealed by the Financial Sector Conduct Authority (FSCA) following an in-depth study of the crypto industry and its potential risks to South Africa’s economy and financial sector.
The study was conducted to help the FSCA understand the risks of the widespread adoption of crypto assets on the traditional financial system and the economy, head of the regulator’s fintech division, Awelani Rahulani, told Newzroom Afrika.
“It will place us in a position where we know how we could respond in terms of our regulatory frameworks, licencing of products, and supervision,” Rahulani said.
In October 2022, the FSCA declared cryptocurrencies to be a financial product, allowing crypto trading platforms to become licenced and placing them under its regulatory purview.
The study also showed that unbacked crypto assets, such as Bitcoin, are the most popular type in South Africa, mimicking global trends.
This shows that most people engage with crypto for speculative purposes and invest with the intention of making a quick return and exiting the space, Rahulani said.
It also revealed that the vast majority of crypto trading platforms used by South Africans are based within the country.
This makes it easy for the FSCA to regulate, with about 45% of all crypto platforms being based in Cape Town alone.
Rahulani emphasised that the crypto trading industry is still small compared to the traditional finance sector.
However, this does not mean that the industry does not pose a risk to financial stability as crypto products are used by ordinary South Africans who also engage with the broader economy and traditional finance sector.
“This has put us in a position whereby we have to put measures into place to make sure that we are about to regulate and monitor this space very closely,” Rahulani said.
The data collected by the FSCA is supported by information from the popular crypto trading platform, Luno.
It said that Sub-Saharan Africa has the highest adoption and use of Bitcoin in the world, and South Africa’s regulators are leading the way in making cryptocurrencies more accessible.